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The case against the government's plan for two-year mortgage holidays is easy to make. Doesn't the idea fail the "moral hazard" test? It could be interpreted as invitation to splurge your savings on a new car, safe in the knowledge that you won't lose your home if you lose your job. That's not a way to encourage prudent behaviour.
And what are government estimates of the scheme's cost based on? The theoretical liability for the taxpayer is put at £1bn but the likely cost is estimated at £100m. That seems to assume that the overwhelming majority of people who lose their jobs will find new ones quickly. That hope could soon look heroic.
From the point of view of the banks (half of which are owned in whole or part by us, the taxpayers, don't forget), the scheme could simply exaggerate losses. A homeowner may not be in negative equity at the moment he or she starts a mortgage holiday but, after two years, the arithmetic could be different if house prices continue to decline. If repossession happens anyway after two years, the bank will suffer a loss, increasing the chances that the taxpayer will be sucked into another round of recapitalisation.
The instinct to ease the human pain of repossession is honourable. But the devil is in the detail of this scheme. There was little detail yesterday, which is not encouraging.
Tied to the rails
It is only two months since Brian Souter said shares in Stagecoach were as close to gilts as one can get in the current economic environment.
He's still right in a sense. Running buses and trains remains a cash-generative business - all those cash fares and season tickets mean that Stagecoach still feels confident in talking about 10% annual dividend increases. But a collapse in the share price from 236p in October to 143p is probably not what Souter imagined.
The fears revealed yesterday are concentrated in the rail business, about 40% of Stagecoach's revenues, and specifically in the South West Trains franchise based in Waterloo. The equation is simple: fewer City workers means slower revenue growth.
Next year's slowdown will also arrive at the worst possible moment for Stagecoach. Instead of this year's £21m subsidy, the firm will pay £42m for the privilege of running the franchise. Worse, an insurance arrangement - whereby the Department for Transport covers 80% of losses if passenger numbers fall off a cliff - doesn't kick in until 2010. Nor will fare increases save the day: most fares are regulated by a retail prices index plus 1% formula, meaning deflation in the economy is a rail operator's worst nightmare.
The correlation between gross domestic product and rail travel has been close for decades, so perhaps the City should not have been surprised by Stagecoach's comments. But the frantic pace at which the entire sector is cutting jobs suggests companies are now desperately trying to rework their business models. Given that modern rail franchises run for a decade, the visibility on future earnings is poor. Until it improves, the City's thinking may not be more sophisticated than "buses good, trains bad". Stagecoach compares badly with most of its peers on that measure.
From star to duffer
So farewell, John Duffield. Yesterday's debt-for-equity announcement from New Star Asset Management didn't say the founder and chairman would be bowing out, but his departure is surely only a matter of time.
New Star is to be taken over by its banks and it is hard to see how Duffield could be described as a "key employee" who must be given an incentive to stay. He no longer manages money directly and his reputation for finding talented stock-pickers has been undermined by the turnover in chief investment officers at New Star. More importantly, Duffield will be linked forever with the disastrous £363m return of cash to shareholders, which imposed an intolerable debt on New Star. A clean break would be best for all parties.
It is a sad end to a great City career. Sad, too, that Duffield could not admit that last year's refinancing was a mistake. "The cost of this restructuring is regrettably a substantial dilution for ordinary shareholders, including me," he said.
That's true but, come on, John, the pain of your dilution is softened by the £150m you took out of New Star in the good days. And there was really no need to load a volatile fund management business with a level of debt that would not have embarrassed a water utility. The word you are searching for is not regrettable, it is avoidable.
nils.pratley@guardian.co.uk
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